If the Federal Reserve keeps interest rates unchanged at its July meeting, it will mark the sixth consecutive time the federal funds rate has been maintained within the 3.5-3.75% range. Regardless of any subsequent signals from Fed Chairman Warsh, the Fed’s continued adherence to the unchanged rate reflects that it is not currently concerned about a rapid rise in US inflation. Furthermore, it indicates to the market that current interest rates are neutral. As long as confidence remains that inflation will gradually fall back to the Fed’s 2% target, market participants should expect that even if the Fed raises rates this year, it will likely only do so once or twice, and the total increase for the year will not exceed 0.5%. In this scenario, risk appetite for gold should not completely diminish, providing a crucial impetus for a volatile rebound in gold prices.

A long position can be established around $4,076, with a short-term target of $4,172 for profit-taking and a stop-loss at $4,056.

Gold Price 1-Hour Chart:

Ferris Kwok

Chief Analyst
Success Finance Group

Email: ferris.kwok@successfn.com